Q2 2021 VTEX Earnings Call
Hello, everyone and welcome to <unk> earnings Conference call for the quarter ended June 30, 2021 and.
Well yeah. It does put him on this investor Relations director Kirby texts.
Our senior ministers, presenting today are Joe I'll, let them ask junior co CEO uncle Thunder I'm, just gotta look I'm at Liberty Sinus Executive Officer.
Additionally, my do you end up on the other part of your co CEO of my Thunder and the Apple.
Florida, Chief Financial Officer will be available during today's Q&A session.
I remind you that management may make forward looking statements relating to such matters as continued growth prospects for the company industry trends and product and technology initiatives.
These statements are based on currently available information and our current assumptions expectations on British elections about future events, while we believe that our we're essentially spectation. Some protections are reasonable in view of the currently available information you are cautioned not to place undue reliance on these forward looking statements.
Certain risks and uncertainties are described under risk factors and cautionary statements regarding forward looking statements sections, all the beech ex registration statements on form F. One eight and other <unk> filings with the U S Securities and Exchange Commission, which are available on nowhere you Mr relation website.
Finally, I would like to remind you that during the course of this conference call. We may discuss some non-GAAP measures a reconciliation of those measures to the nearest comparable GAAP measures can be found in the second quarter 'twenty to 'twenty One earnings press release available on our Investor Relations website.
Now, let me turn the call over to cut out of the Shadows. The floor is all yours.
Thanks, Julia welcome everyone and thanks for joining us today for 2021st second quarter earnings results.
First earnings call Apple.
Before jumping into our quarterly performance I would like to address two topics first I want to thank all the taxes for the hard work and commitment which enabled us to complete our initial public offering.
Tumors, who trust us every day to deliver their mission.
Critical comments infrastructure.
Our ecosystem of partners, who build new solutions every day, adding value to our customers <unk> brought the form and to both a long time and our new investors and partners that share our vision.
This was an important milestone for the tax but it is just the beginning of what we believe will be a transformational journey ahead of us.
Second as it's the first time I'm doing days and some of you may not know was that well.
Would like to take this opportunity to give you a quick overview on what we do why we do it and where we're going.
Last year, so side was disrupted by a pandemic the challenges on the personal and professional level COVID-19, pocketed everyone's lives in so many ways and one thing that the pandemic demonstrated is that the way of doing business needed to change to Arkoma data.
Transacting online as well as in person.
These two economies here to stay and all players need to develop a strong and integrated online presence in order to capture the new possibilities technology enables.
Consumers now expect brands to make shopping experiences as COVID-19.
And seamless as possible from product discovery to purchasing across all channels.
Such retailers need the scalable and flexible block from the lesson test multiple strategies to better serve the consumers.
Brand needs to be relevant to the consumers and for that they must leverage technology, an industry expert partners. So they can focus on their brand differentiation.
Customers often protagonist of the digital transformation we are.
We're here to accelerate that.
The tax is where commerce happens our platform is designed to be the operating system for the commerce ecosystem.
Enabling enterprise brands and retailers to orchestrate the complex network of consumers business partners suppliers and fulfillment providers.
We are building the global digital commerce infrastructure.
Just to be relevant for the modern convenience driven consumer.
We were born as soft as a service for enterprise. Our solution is designed to deliver both speed to market and customization.
Why do unique in the market.
We enable enterprise brands and retailers to have a quicker time to revenue. Thanks to our extensive out of the box capabilities that combine distributed order management solutions with traditional core Congress native marketplace capability.
And it gives a lawful first so realistic tends to be the 2 million.
This allows our customers to start fast leveraging our almost <unk> multi tenant partner for them, while also freeing talent to focus on their business needs instead of infrastructure.
Our customers leverage our co possible development platform to quickly test new ways to reach consumers both by building out their own futures or candidly tapping into the knowledge of our ecosystem of digital commerce expertise.
All click away.
Apple store.
We believe this approach is core to our value proposition and tough to replicate.
The age of Standalone software has ended.
This new era fully integrated software is as valuable as the network. It powers, we envision the tax being at the center of the vast network that natively connect every part of the global digital commerce ecosystem as the single control panel.
To manage all aspects of brands and retailers sales lifecycle.
Zoete in what we believe to be a future proof block a firm that makes collaboration is scalable.
Our ambition is to help our customers to stay ahead of the curve.
And to go beyond what Congress looks like today.
In order to become the one stop shop for the convenience driven consumer we are low brands to easily set up commerce relationships to sell products from third party sellers.
Enabling.
But without having to manage all the incremental inventory themselves.
This collaborative commerce concept enabled them to receive orders from various sales channel, while seamlessly tap into inventory across multiple fulfillment channels in summary beyond building out their own E Commerce strategy.
We also provide them with the native tools not only to lease the profit being marketplaces, but also to become a market based stem cells.
We're not building a platform for what our customers are asking for we're building a plateau for what they need today and in the future we.
We enable enterprise brands and retailers to develop a full omni channel strategies with the global scope.
We will continue to execute our strategy to pursue that opportunity with a clear vision to become the backbone for global commerce by phone.
Four foundations.
Zero friction customer onboarding.
Zero friction collaboration both internally among teens and customers as well, but externally a more marketplace sellers fulfillment operations et cetera.
Single control panel for every order.
And.
The development platform of choice for digital Commerce.
We're committed to these foundations and believe that they will generate a virtuous cycle that can accelerate the digital commerce ecosystem and create a powerful network effect around vitesse.
Having said that let me talk about our second quarter performance.
Our robust performance despite the gradual reopening of physical stores showcase the size of the opportunity of digitalization in the emerging markets.
As anticipated the key Choo flash numbers in our S. One.
Our G. M V reached two $4 billion, representing a 25% year over year growth on an FX neutral basis.
This represents a sequential growth deceleration as we are lapping the pandemic transformation the effect on the retail model.
Which particularly in the second quarter of 2020 migrated tool line only due to the lockdown were implemented in most countries, where we have operations.
When analyzing the universe of our customers with more than 25000.
<unk> annual recurring revenue they grew at a faster pace than the overall company GNP growth.
Also if we deep dive on those customers too was without relevant physical stores operations increased <unk> <unk> year over year by 50% on an FX neutral basis, while customers with relevant physical stores operation increase the GMB by 'twenty.
<unk> percent on an FX neutral basis as the Congress is currently not be only sales channels available for discussion which today.
We benefit from having a massive addressable market.
<unk> to continue growing double digits CAGR for use by industry experts.
With the market up over four trillion dollars in size in 2020, we have a lot of runway to continue expanding.
According to re market tier Latin America is expected to be six years behind the global E. Commerce penetration curve. We believe we know the opportunity ahead of us.
As we have observed similar market dynamics.
Economies.
This is just the beginning of what we consider will be a remarkable journey <unk> detects and Moreover for the region.
The tax is leading e-commerce enablement in Latin America, we are well positioned to capture this massive opportunity.
Our world class product and local is developer ecosystems.
They bring us to continue attracting more brands to our platform.
Not only are we gaining market share. We are also creating the market as roughly half of our new customer additions are greenfield opportunities.
The tax is it material driving force, enabling commerce in Latin America.
Some brands that launched with US this quarter that didn't have online presence in the region before well Walmart to Central America, including Costa Rica and for other countries in the region.
<unk> in Brazil.
Pay in Brazil.
During the quarter. We also added customers that migrated from other platforms, including diners club in Peru kind of food in Argentina in Q store in Chile.
We've also been able to build entrenched sticky relationships with premier brands and retailers as we never stopped innovating and enhancing our value proposition.
We understand that being ahead of the curve is not an option it's a must.
A customer that showcase this is workable who's starting operating with us in Brazil, with one online store and now has more than five stores in Brazil to serve the many brands that they have in their portfolio, including breast and colon soup kitchen agents.
So.
In addition, we are expanding our relationship with whirlpool outside of Brazil, We now have online stores in over five countries in Latin America and for online stores in Europe, including two in Italy.
One each in Russia and France.
We've continued to see momentum in growing our customer base, largely driven by the compounding effect of our ecosystem with over a 1000 integrated solutions 200, the size 100 market places and <unk> payment solutions.
This ecosystem ultimately helps our customers to evolve and drive incremental sales volumes.
But we are just in the beginning.
Continued to increase our efforts in order to scale with tax global growth in a fast and efficient way both in current and new geographies. We aim to support the growth of our customers around the world by delivering a world class platform and by expanding our regional capabilities.
Yes.
Given our strong brand awareness and market position in Brazil, we are focusing most of our energy and capital to expand to other countries within Latin America.
Which we believe will bring most of our growth in the short to medium term.
Additionally, the ecosystem that we have around the tax is one of our most relevant moats and the ecosystem needs to be locally country by country. We have built it in Brazil, and we are now building country by country in Latin America will.
We believe our platform is competitive globally and industry experts, including IDC and Gartner also validates this view.
Over time, we expect to build an ecosystem around our platform to compete successfully and so.
Similarly, all around the world.
This will take time as we have a long sales cycle and we are currently focusing in Latin America.
But we are planting the seeds already for our operations across United States and Europe.
We intend to expand our capabilities by increasing our investments in our core platform.
Our main goal is to enable our customers to be one step ahead of the evolving needs of the consumers.
Powered by cutting edge technology and capabilities plus strong an extensive network of partners and peers that they will leverage.
For this purpose.
At the beginning of each quarter with Texas commit to milestone should go beyond the delivery of new folks analysis with a customer centric approach focusing on system success and qualities.
We all commit the same goal, bringing brands consumer closer.
During the second quarter of 2021st we've been able to launch several functionalities in order to build together with our customers the commerce of tomorrow.
The tax launched enhancements to the core commerce capabilities by further differentiated value proposition.
Tax intelligent search now can leverage <unk> massive inventory intelligence to ratio <unk> search results adapting to our customers' local operations and increasing conversion.
<unk> also launched a new feature allowing customers to manage their capacity for scheduled deliveries aiming to improve the precision of promises delays to consumers and the percentage of isolation captive scheduled deliveries.
The tax launches selected features to improve local differentiation in some strategic markets in Brazil, new payment parameters were added to native integration shock customers to comply with the new marketplace regulation.
Argentina Shakeout geolocation precision was enhanced and improved conversion in.
In the U S. Oems report added local tax business rules.
The new <unk> with the new consistent user interface and the new sales dashboard is being rollout and once it launches to all the U S customers.
Furthermore, the techs continue to evolve its product in a way that removes usability friction for enterprise users and then has to use it and experience to manage inventory creates promotions and for marketplace operators to evaluate the catalog new the new offers from the sellers.
The pace of execution detects has sustained it mainly attributable to a hybrid focus on fostering a culture of integrity authenticity commitment and responsibility we are now.
<unk> hundred 86, the Texas.
80% more than in the same quarter of last year.
Our leading position in Latin American market, our lowest to attract and retain the best talent in our markets.
As we grow we will benefit from continuously evolving our culture.
Very important competitive advantage of ours.
Diversity is key to our success, having different perspective enable us to change the status quo to reach out out of the box solutions that we should never have thought of.
Recapping before I leave the floor to hiccup.
The expectations of the 21st century consumer or higher every day and this is raising the bar for brands and retailers.
Consumers want to interact seamlessly.
Multiples channels find everything they want in a single place and receive product in record time.
We know there is a transformative future ahead, where retailers will need shoe incrementally shift more volume to their online channels brand manufacturers, we want to go direct to consumer.
And both brands and retailers may benefit from setting up their own marketplaces to serve consumers in a single place.
Pretax womb powered them to build their digital transformation with speed to market and flexibility focused organization without extra pointed.
We envision with tax being the operating system that will empower brands and retailers to stay relevant to the convenience driven consumer consolidating our leadership position in Latin America through strong execution and focus.
This is just the beginning we adhere to accelerated.
Now I will turn the call to Ricardo who can cover our financial progress report for the quarter.
Thank you.
Hello, everyone pleasure to be here update in one our financial performance for the second quarter of 2021.
Before moving to the quarterly update I would like to take a couple of minutes to refresh wall on our revenue model as well as recap our recent performance.
Our revenue model is very simple, we charge our customers a mix of fixed and variable take rate for full access to our digital commerce platform.
The variable take rate component represents approximately two thirds of our revenue and is charged as a percentage of our customers GMT.
So as our customers grow their GMT, we grow our revenue with them.
This model create strong alignment between us and our customers.
It is important to note that we don't sell modules our customers pay to receive broad access to the <unk> platform. Now all you can eat model, we upsell by helping our customers through their digital evolution for eastern from a plain vanilla ecommerce website to an omnichannel operation.
Setting up their own marketplace, we upsell by helping our customers increase their Judy clearly aligning our incentives with more customers.
To finalize on our revenue model, we have tiered pricing model and the fixed versus variable fee is mostly a risk allocation decision made by our customers.
If they do then the GMT they will January they can choose to pay a higher fixed fee and lower take rate.
They're earlier in their digital journey, they can take less risk by being in lower fees and higher take rate.
Naturally as our current customers grow and gain confidence.
Strategy, they tend to take more risk by being a higher big city and lower take rate.
As our customers grow they are up here, meaning the DPA slightly lower take rate yet you are higher total dollar amount to be tax.
Now quickly recap our performance in 2020 and at the beginning of 2021.
2020 was an outstanding year for <unk>. We helped you benefited from the e-commerce acceleration growing with our existing customers <unk> a key driver of our net revenue retention we.
We also added new online stores or the same customers added new customers to our base and continue our geographical expansion all key drivers for our medium and long term growth.
The first quarter of 2021 was also a highlight of our historical performance.
GMT growing at triple digits and revenue at high double digits.
During the first three months of the year, we continued to experience the benefits of the incremental e-commerce penetration in the countries, where we operate.
In Q2, we are now starting to lap the increase in digital commerce penetration, resulting in a tougher comp this quarter.
With that intro.
Diving to the second quarter of 2021 numbers.
Revenue increased to $39 million year over year increase of 22, 1% in U S dollars.
18, 2% on an FX neutral basis.
Subscription revenues represented 96% of our total revenue and grew 20 point Europe percent year over year on an FX neutral basis.
We continue to see strong sales momentum by our sales and marketing team angle live of new online stores.
Increasing our new store contribution as a percentage of total revenues to 62% in the second quarter of 2021 from 12, 2% from the second quarter of 2020.
SBA to lap the pandemic effect this quarter. It is important to put the numbers in context by analyzing them on a two year CAGR basis from that perspective, our total revenue two year eager for the second quarter of 2021 was 67% on an FX neutral basis simpler.
The total revenue two year CAGR for the first quarter of 2021 of 66% on an FX neutral basis.
This demonstrates how healthy and sustainable our revenue growth has been.
Before moving down the P&L I would like to remind the audience that from a business perspective, we think about our P&L as a combination of <unk>, our existing stores P&L and our new stores P&L.
Our existing stores P&L represents around 80% to 85% of the tax revenues excluding smbs.
Has the highest operating margin and growth in our net revenue retention rate.
We don't have any significant sales and marketing expenses to serve our existing stores.
We only have support costs, which are already included in our subscription costs.
This existing stores P&L growth with our net revenue retention, which is mainly driven by the GMB growth of our existing stores.
Our variable revenue as a percentage of our total revenue and our annual revenue churn.
Our new stores P&L represents around 15% to 20% of the tax revenue excluding SMB.
As a negative operating margin, but it brings new stores to our base with attractive unit economics.
So we're getting new stores is a key focus of our sales and marketing team. So this P&L includes almost all those expenses now.
Now given that our unit economics measure by our LTV to CAC has been above six times in the last two years, we believe that deploying capital in this P&L is a sound investment.
Considering that one we are playing in Underpenetrated, Latin American market with only 6% penetration.
We have attractive unit economics above six times LTV to CAC.
We develop sticky relationships with our customers. We've only mid single digit annual revenue churn, we plan to continue investing in adding new stores as long as financially accretive for the long term growth or pretax even if that has some short term impacts to our margins.
With that said, let's continue and move down our P&L.
Subscription gross profit was $22 million compared to $15.9 million into the first quarter of 2021.
Subscription gross margin improved to 68, 1% in the second quarter of 2021 from 64, 7% in the first quarter of 2021.
The quarter over quarter improvement reflects operational hosting cost efficiencies.
We continue to be encouraged by the destock commerce opportunity in Latin America.
Penetration continues to increase even with the gradual reopening of brick and mortar retail stores throughout the region.
Digital transformation and destock Walmart has become C level and board subject.
Therefore, we have decided to accelerate our investments to capture this market opportunity.
As a result, our non-GAAP loss from operations was $10.4 million during the second quarter of 2021.
Bear to a non-GAAP income from operations of $6.7 million in the same quarter of 2020.
As of the three months ended June 32021, B tax had a negative $14.7 million free cash flow.
Primarily driven by our non-GAAP loss from operations, which is mostly explained by the expansion of our workforce, especially our sales and marketing team.
Talking about our outlook, we expect to continue to see strong new stores growth it.
It is important to note that in Q3, our existing stores will face tougher comps as lockdown started in the region in mid April of last year and.
And brands took some time to shift their volumes through online channels.
Although Q3 comps will be tougher than Youtube during the fourth quarter of 2020 brick and mortar stores. He started to gradually reopen so comps should ease from Q4 onwards.
We did in mind, we are targeting revenue in the 31 to $31.5 million range for the third quarter of 2021, implying a similar two year revenue CAGR compared to Q1 and Q2.
For 2021, we're targeting $124 million to $126 million range.
This outlook assumes that current FX rates remain constant for the remainder of the year.
Wrapping up todays call, we once a week for us and it is clear to us that the world has changed the E. Commerce acceleration here to stay we are focused on speeding up our investment to capture this opportunity and we are seeing strong momentum in contracts for new stores.
We believe there's an attractive opportunity in front of us and we are increasingly confident in our ability to get the lives on it.
Thanks, everyone for joining this conference call. We look forward to keep you updated on our progress with that let's open it up for questions now.
Thank you.
We will now begin question and answer session.
I'd like to ask a question. Please press star followed by one on you touched I wanted to take this opportunity and thank you all again for joining our first earnings conference call ever.
Apologies for my injection if for any reason you would like to use your question. Please press star followed by Tim.
Again to ask a question please press star one.
As a reminder.
Speakers.
Please remember to pick up your handset before asking your question.
Please press star one if you would like to ask a question.
We will pause here briefly to allow questions to generate thank you.
The first question comes from the line of Sterling Auty with Jpmorgan you May proceed.
Yeah, Thanks, Hi, guys welcome them to the public markets.
To get US started I wanted to ask on one of the last comments you talked about the strength of the pipeline for additional new stores I'm wondering if you can give us a sense of the mix of how many of those stores or what percentage of those stores do you expect to come from brand New brands that you haven't worked before versus.
Listing customers.
Hi, Sterling Riccardo so dry here from the tax. Thanks, Thanks, a lot for the question and joining the call.
Before going to your question I think it's important true.
Explain also choose to everyone that we see.
A very interesting mix of new stores between Greenfields E Commerce operations in migrations from other ecommerce platforms right, it's roughly half and half.
And our current customers they can have more than one store as you know.
And is that all the major on the prepared remarks.
We have customers like warp or Motorola that are opening stores in various geographies and even adding more stores in the same country to serve the brands that they have in their portfolio. So this is interesting trend.
Yes.
Cherry picking up new customers, if we look at our top 100 customers. We can see that the inquiries a lot their number of stores.
R R.
Customer right. So it's an interesting trend now this is very much in the early innings only 8% of our customers have two or more stores with us so it's not.
Huge driver of new stores overall, but it's an interesting trend to see so I'll see out say answering your question now the vast majority of the new stores that we are seeing and the revenue coming from these new stores are driven by.
Net new customers and no either greenfield or migrations.
And it's only early east for the same customers opening more stores, but it's an attractive and interesting trend that we're seeing already.
No that's great and that makes a lot of sense, maybe one quick follow up.
How are your existing customers now that the economies are starting to open up and we're seeing more in store shopping what are they doing in terms of the marketing and advertising to continue to drive their e-commerce efforts.
Yeah, Yeah, and I was telling great great question.
So our existing customers.
We have to segment them by the ones that have rather than today's call.
Our operations physical store operations and the ones that are more digitally native and as mentioned by hit all of them in the prepared remarks.
The ones that are.
They don't have.
Rather than physical store operations are growing roughly 50%.
The gym deal on a year over year basis.
It's a life as usual for them right because they are mostly of digital.
Commerce right. So the reopening of the stores is not impacting them materially now the customers that have rather than physical stores operations. Now. These stores are open and they are.
Bringing customers back to the stores now the interesting thing is that you know a lot of them.
Started omnichannel operations during the pandemic or invested a lot in their digital channel during the pandemic and now that they have already done in working they are doing more in <unk>.
Ship from store or buy online pickup in store. So we have seen these trends picking up.
Now that they invested in the digital transformation right. So.
They are bringing customers back to their stores, but they also.
Attracted and investing their omnichannel operations, and even facing the tough comps where most of these customers had.
Their physical stores closed last year, so almost all of their volume was online our GMT with these customers is it still growing right I mean, even looking at this.
Yeah.
Existing store, so we're moving to net new stores existing stores.
Still positive right. So that tells you how they are investing in their digital transformation in the acceleration of that destock bombers.
That's great. Thank you guys.
Thank you Charlie.
Hey, Mr housing. The next question comes from the line of Josh Beck with Keybanc you May proceed.
Thank you team for taking the question my congratulations as well as the.
New life at least in the in the public markets.
I wanted to ask a little bit about that question around <unk>.
Q4 seasonality obviously, we.
In prior years pre Covid there was certainly some.
Some cadence and some normalcy to the seasonality obviously this year with varying paces of reopening and shifting consumer habits, it's it's probably a little.
Perhaps different so just curious about what you baked in with respect to Q4, and how we should be thinking about that seasonality.
Yeah, Great Hi, Josh Great to connect you through here.
Great question. So I think it's important information to average one that as we mentioned right roughly two thirds of our revenue is driven by GMB.
We have a take rate on the gym gilboa our customers. So we have.
Ah seasonality, that's aligned with the retail seasonality.
Latin America.
And as you all know Q4 is a very strong quarter for the retail industry.
And we are taking that into consideration in our projections and our guidance.
And I think.
If we look at 'twenty 'twenty because of the pandemic that you know.
In fact in the seasonality of the year. So it's not a great year to look at seasonality.
Between quarters among quarters, but 2019 is a good year for you guys have a sense of the seasonality of each quarter.
So 2021 should be more aligned with the historical seasonality.
And 2019 I believe it's a good a good proxy for what this seasonality.
Very helpful. And then maybe just a follow up product question, you, obviously have a number of really.
Quality enhancements that you walked through relative to.
Intelligence intelligent search.
Some local differentiation.
Market features just just curious.
What has the reception to these types of of enhancements.
The customer conversations.
That you've been having.
So Josh. Thank you. This is Jed I'll just speaking thank you for the question. This deal realistic for us to define what where we're going to do any hesitance enough drug it's very aligned with our customers. This has this is us having the strategical milestones about where.
Are we going to get should be broad get the product to and this is about us being the single control panel for every order being the developer bought the foremost choice for Congress and also be.
Allowing zero friction collaborations between the ecosystem and its peers.
This is the MAU strategical milestones, but actually.
The day to day improvements that we do truck product is.
The.
Requests at all.
Our main customers too.
That direction.
So this all of these capabilities that we now sit here and other capabilities that due to a soft improvements.
Prudent that we do just softer are related.
They react request from all the leaders of the industry. So this is Ed.
And you might feel that this is not usual, but that's remember we work for enterprise companies. They are strategic they have strong area. They have strategical views of where the product yugo. So this so this <unk>.
Most of the times it has a lot of traction because it was so close to them.
Very helpful. Thank you gentlemen.
Yes.
He cargo who kind of once you do some so that should Africa, yes, yes no.
I think I think an important point on the intelligence surge and as some of the updates that we announced through the marketing this quarter. We believe a lot of this commerce capabilities their local right in the ecosystem is also very local so some of the developments announce.
Its development to help the local commerce capabilities for our customers that will help them differentiate in the marketplace. So that's I think an important point.
More information as well.
Right.
Thank you both.
Helpful.
Thank you Mr back. The next question comes from the line of Daniel Bartus with Bank of America. You May proceed.
Great Hey, guys. Thanks for taking the questions here.
Wanted to ask about what you see for <unk>, a little bit clearly with revenue growth of roughly 13%.
Talked about some headwinds in there and some tough comps maybe you can just walk a little bit.
Country by country, where youre seeing the most reopening headwinds or risks.
Yes, Hi, Dan Thanks for the question.
No.
I think Latin America.
Had a major impact in a later reopening.
The market even the.
Covid vaccination and all of that right. So.
And 94% of all revenue comes from Latin America. So I will say the dynamics of the reopening is very similar in Brazil, and Latam, excluding Brazil, right, obviously, the U S and in Europe had experienced reopening sooner.
But it's only 6% of the overall revenue so.
It's not relevant.
Relevant.
In fact for the overall business now between the geographies right I mean, obviously we are.
As announced in the F. One we are seeing a brazil growing slower than Latam, excluding Brazil, and the rest of the world given the stage of development of the country.
But still in Q2, Brazil grew double digits in revenue, so it's still attractive growth even with the tough comps.
Now for Q3, we expect similar type of dynamics right, it's a tougher comp quarter as we mention.
In the prepared remarks.
But among geographies I shouldn't you shouldn't be a huge difference it's more about the stage of development of each country in each region.
Of more reopening type of dynamics I would say.
Okay great.
Hey.
Yes.
Alright.
And then let's put the dog.
Just to complete that and we can look at them in the last week.
Last year in the SEC on a quarterly had April April was the first thing.
Uh huh.
And then they shut down once they started to start in April.
What's starting drone April to me the guidance.
<unk> strong second quarter wasn't it.
Doug.
Net net.
Explain.
The company.
Okay. Okay got it thanks for that guys and.
Just a follow up it's a bit of a clarification I was wondering if you guys could could you just talk a little bit about marketplaces, and how you guys work with them and theoretically if one of your customers sells through like Mercado Libre I am curious if you can talk about how much value you guys would get from that and if that would be potentially counted in there.
The GMB as well.
Perfect.
So the this is this is a lot of us connecting to marketplaces is aligned with the goal of being the single control panel for every order for our customers right.
We want to be the the point of contact.
The relationship between our customers the brands and its consumers. So yes, the marketplace orders and traffic should be relative to our performance. That's our vision and we are making.
Assistant and strong steps into.
That direction.
We couldnt have not most of the revenue coming from orders that are generated from market Facebook.
Uh huh.
Two digital artists like more than 10% less than 20%.
Is this business.
Something that we believe we need to provide your customers for them to have this single control panel and we.
We provide first party integrations for this strategic calling big marketplaces, and we provide connections.
Third party of the marketplace.
Integrate without to our system as well.
About I think you would talk about the revenue that we get from that when we did we still get a take rate that is a little bit smaller than the take rate that we get when we provide.
Providing orders from the first party proprietary sales channel all of our customers, we aggregate more value there and yes. It also aggregating to our G. M D and as I said, it's something between 10% to 20% of our.
We get to <unk>.
Okay, great. Thanks, guys.
Nice job out of the gate here.
Thank you very much.
Thank you Mr. Baca. Please the next question comes from the line of Diego.
<unk> with Goldman Sachs You May proceed.
Yes, probably.
Thanks for taking my question. My first question is regarding the development.
The type of coupon.
Currently we're beta Deepak cooperates.
I understand that even though the backlog.
People is not.
For you to grow your people have abroad.
Having an ecosystem plays medisoft brought upon the now much better than that.
The position, where I can improve the value proposition for Europe.
Customers as well so that being said I'm just curious to understand what can we do to premier.
If I could keep them in a new market.
How long it takes for.
Humphrey, let's say to be able to take position.
Thank you.
Okay.
Thank you thank you Jim.
Yes, when we get to a country theres no ecosystem with just a very good softer right.
As you know that from IDC and Gartner.
They think highly of us as a product.
But this is not the end game for us.
I repeat that the law Europe Standalone software as Gandhi, our software is as solid as the network it empowers.
And so so we do need a ecosystem in place for us to exercise the full power of our value proposition.
And this is done.
In different ways, depending on the phase that we are in the country was starting the country Nobody wants should look at it as nobody cares about us and.
They only care about us if we are.
If we are.
With.
Customers with referral customers. So when we get into a country. The only thing that we can do to be successful there.
Get referral customers shop platform as we get them, we create cases.
When we start to get the attention.
Of the customers of the ecosystem around us in the country. So for us to get the first customers, we usually call some local ecosystem players and and provide the help.
<unk>.
Ecosystem play the system integrators that are are the countries that we are already mature.
So be help they transmit knowledge they kind of accelerate the system integrator knowledge about our platform.
Italy, we create some cases eventually got some attention.
And then we start the flywheel.
It takes a while especially to get the affordable costumers.
I can.
It's a very dynamic market changes.
<unk> a lot as you know that the e-commerce market, but I can give you some data points right. When we started in Brazil, we work like.
Maybe there was there was no ecosystem available in Brazil before so it was difficult to create.
But we have the first mover advantage.
When we when we move to Argentina. It was it was halfway it's like we have.
Some penetration of magenta at that time, a lot of agencies that newmont Jetblue, a lot which is.
Bay area, but at the same time, a leverage because there are agencies people people are already has the business model they know how to get money from.
Solving and building integrations with ecommerce.
So in Argentina, I would say that for us to get the predictable pipeline that's the.
Next I would say milestone for us get referral customers, then get predictable pipeline of sales.
It took us I would say four to five years and in every other country.
Latin America, Colombia.
Peru, Chile it took.
Roughly the same amount of money from getting from the referral customers should be predictable pipeline.
For us to get the first referral customer.
It varies a lot it varied a lot it took.
Two or three years to to get one in Argentina. It took two years to get one in Chile.
It varies so roughly let's say you can take.
Five maybe six years for us to get a predictable pipeline with.
A stronger ecosystem in the country after we start to invest in that.
Okay.
That's super helpful. Thank you very much.
Thank you.
So now I think the time.
Our time is over.
Very happy to have this first earnings call I'm very happy to be here with you. We are all very.
Very excited with the future ahead of us.
Being a public company this will bring benefits for for our companies for team for for the ecosystem.
We're very excited with the new phase. This is important very important milestone for us. This first earnings call I'd like to thank a lot for the ones that give us the privilege of listening in and for the ones that our investors are tend to be our investors.
Thank you very much as well this for your business I consider detects should be a very special company.
Thousands of very special people working towards the same goal would disrupt in Congress and we thinking how things are done in this landscape.
We are only at the beginning of the digital Commerce journey and the tax is here to accelerate it.
So thank you very much you all I hope we can meet each other again in the next quarter.
Thank you.
That concludes the conference call. Thank you for your participation and enjoy the rest of your day.
Okay.